According to The Guardian’s Andrew Sparrow, at any rate, who noted the Lib Dem pensions minister’s fingerprints all over this week’s budget:

The Lib Dem pensions minister, Steve Webb, has now become one of the most important people in government. A rare example of a minister who is an expert in his area, he has been pushing the pension pot liberalisation plan (which is firmly rooted in longstanding Lib Dem party policy) and the legislation on this – which he will almost certainly have to take through the Commons – may be the most important of the next session of parliament. But it could all go horribly wrong. The industry is already furious, and there is at least a chance that the legislation could unravel.

Pensions Minister Steve Webb is an unusual politician. He is unusual in being a professor. He taught social policy at Bath University in the 1990s. He is unusual in his recreations, too, which are listed in Who’s Who as being ‘internet issue, church organ and the oboe’.

What marks him out from most of his fellow legislators, however, is that he actually understands the pensions system. Given its complexity, that is no small achievement. You need a professor for such things.

Yesterday Lib Dem Mr Webb, who in appearance could be mistaken for a middle-ranking personnel officer, arrived at the Commons to explain proposed changes to state pensions. He may not cut an imposing figure but he soon had the Chamber spellbound. He did something rare, you see: he answered complex questions directly, without deviation or hesitation. He also (schweinhund!) flourished actuarial percentages with all the confidence of a pensions salesman. Doubters were silenced.

7 Comments

Yes, I take my hat off to Steve. I am proud to see him as an effective Lib Dem minister … even moreso that he is doing so much for our country. Removing the shackles of having to buy annuities is a very positive step for our pensioners.

I do not always agree with Steve Webb. Although I am probably much more likely to agree with him than the party leader who made his views known in the infamous plane flight where Clegg roundly abused Webb within earshot of a Mirror reporter. I am not certain that I agree with him on this latest pension policy. But because it is Steve Webb I am more than prepared to listen and learn. The Quentin Letts tribute quoted above is entirely accurate. Steve Webb earns the respect of almost everyone because of his intelligence and his low key, modest approach. Goodness knows what it was that he did or said to upset Clegg.

Long before Steve Webb was an MP he did some academic work on social security. He was part of a panel, or committee or something looking into the subject. Another participant was a bright young civil servant who was a mathematician, statistician and all round clever pointy headed bloke.

Years later the pointy headed bloke ended up as my boss. It came up in random conversation that I had been to a fringe meeting to listen to Steve Webb at a party conference. My the boss almost fell over himself to pour praise on Steve Webb for being one of the few people he had ever come across who had the intellect necessary to grasp the subject they had studied together. It was one of those rare things, an entirely independent assessment of one person by another, totally objective. My boss was not a Lberal Democrat voter just someone who had worked on a particularly difficult subject and had come away full of admiration for the abilities of one of the people he had worked with.

He also thought that Steve Webb was wasted as a Liberal Democrat MP because it meant that he would never be a minister. Some irony in that I suppose? 🙂

I’ve just watched yesterday’s pensions strategy statement via iPlayer. The one question which Steve Webb seemed to avoid answering is the one which has been raised twice in these pages since the budget. What effect does this new set of options on accrued pension savings have on somebody aged 56 who is made redundant and (after a period on contribution-based benefit) is still unemployed and in need of means-tested benefit?

As a supporter of his from ages ago, I’m sure Steve will allow me to put a more questioning view on his pensions policy.

The first concerns increased retirement age. This has been introduced to cope with longer life expectancy and limit the impact on state pension funding. But, looked at from the perspective of the real economy, this will only be effective if it leads to higher GDP. There are reasons why this might not be the case. It may lead to higher downstream youth unemployment. It may lead to younger more innovative and more productive people waiting longer to move to senior position and in fact reducing GDP. We may retain people in work longer at a phase of life when their contribution is lower than younger people who would otherwise replace them. Boards of directors might come to look like former Soviet Politburos.

The second is the Keynesian effect on demand of pension regimes. What has been the net effect on aggregate demand of recent changes in the pension regime? This matters more than actuarial pension calculations because, as we all know, former pension contributions do not finance current pension payments, and current pension contributions will not finance future pension payments. When we face a Keynesian deficit in aggregate demand, the last thing we need is a lower net current aggregate pension payment/contribution gap. From this point of view, the recent budget relaxation allowing pension pots to be spent is very welcome, even if it does not square too well with other policies seeking to constrain people to provide for extended older age.

I don’t have data or analysis on either of these points, but Steve does have the advantage of a rather larger research team than mine 🙂

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